Tax Reform Group Supports Amended Fuel-Tax Plan

By Sam Stockard

NASHVILLE – One of the nation’s most conservative anti-tax groups is supporting a plan by Sen. Mark Norris to offset fuel-tax increases with a reduction in the state’s grocery tax and nix a proposal to tie rates to the Consumer Price Index.

MARK NORRIS

“This is a big deal,” said Norris, a Collierville Republican and Senate Majority leader.

Americans for Tax Reform president Grover Norquist sent a letter to General Assembly members Monday stating, “If a gas tax increase is offset with an equal or greater tax cut elsewhere in the same bill, ATR does not score a vote for such a deal as a tax increase or Taxpayer Protection Pledge violation.”

The amended version of Senate Bill 1221, which Norris proposed last week after discussing the matter with the governor, complies with those types of taxpayer pledges, Norquist’s letter says.

“The recent amendments made by the Senate, and supported by Gov. (Bill) Haslam, have improved the bill to the extent that the bill is now a net tax decrease, and thus not a violation of the Taxpayer Protection Pledge. The bill no longer indexes the gas tax to inflation, which means gas tax hikes will not be put on autopilot,” Norquist’s letters states.

Norquist points toward similar examples by Gov. Chris Christie in New Jersey, which combined a gas-tax increase with a phase-out of the inheritance tax, sales tax reduction and increase in the earned income tax credit, and by former South Carolina Nikki Haley who called for a gas-tax increase and insisted it be offset with tax relief such as an income tax break.

Norris said the Norquist letter is important “because one of the most conservative tax reform organizations in the country, if not the world, agrees that I’m reallocating revenue to maximize return to the taxpayer.

“This is not an increase that would violate a Taxpayer Protection Pledge. It’s a cut, and they support it, which means others can support our efforts to reallocate revenue and reinvest in the future of Tennessee.”

Norris’ plan calls for reducing the 5 percent sales tax on groceries to 4 percent, a 20 percent reduction, and raising the gas tax by 4 cents in fiscal 2018. It would add another penny in 2019 and one more cent in 2020 while adding 4 cents to the diesel tax next year, three more cents the following year and another 3 cents in the third year. The governor’s initial plan was to push the 21.4-cent gas tax up 7 cents and the 18.4-cent diesel tax up by 12 cents immediately.

The proposal would eliminate a fee increase on rental vehicles along with the plan to tie future increases to the Consumer Price Index. But a $5 increase in the vehicle registration fee and $100 fee on electric cars would remain.

Another part of Norris’ amendment calls for renewing property tax breaks for veterans and disabled and elderly veterans.

After three years, the Norris plan would bring in $355 million for the state transportation fund, as well as city and county governments, for road and bridge work. The idea is to chip away at 962 projects statewide over the next 12 years.

It also would contain franchise and excuse tax breaks for businesses and the Hall tax phase-out on interest and dividends.

Norris said it was a crucial part of enabling the governor’s office to wrap up his $37 billion budget plan.

The House version of Haslam’s bill is at a much different place, containing an increase in the sales tax along with cuts in business and Hall taxes and a 0.5 percent break in the grocery tax.

The House Transportation Committee was to meet Monday, March 20, to discuss the matter, but was not expected to take any action until it holds its regular meeting Tuesday.

Sam Stockard is a Nashville-based reporter covering the Legislature for The Memphis Daily News. He can be reached at sstockard44@gmail.com.